PMI premiums are usually between 0.3% and 1.15% of your loan, and that money can add up. Even if you need to wait an extra year to buy, it might be better for you financially.

Work on your DTI

There’s an important number lenders look at to determine your mortgage rate and whether you qualify for a loan: your debt-to-income ratio, or DTI. Find yours by adding up your current monthly debts plus what your proposed mortgage payment might be and dividing the total by your gross monthly income.

Your overall DTI typically can’t be more than 43% to qualify for a mortgage, but this number can be higher or lower depending on the lender.

Another way lenders figure whether you can afford a loan is to consider only the mortgage payment. “The rate most lenders look for is 28%, meaning your monthly mortgage payment should not exceed 28% of your gross monthly income,” says Brittney Orellano, a Kansas City, MO, real estate broker.

Have some cash on hand

Lenders want to know that you’ll be able to pay the mortgage even if an emergency arises. You should have at least two months’ worth of mortgage payments in a checking, savings, or money market account.

Go local

Definitely check out your neighborhood bank or credit union. “They are actually in the business of lending and want to build relationships with people in the community,” says Trevor Ewen, a personal finance and investment blogger.

“Don’t give up hope if you are self-employed, have a pending divorce, or lack credit history,” says Kimberly Friddle with Hurst Lending & Insurance, a full-service Texas-based mortgage lender. She says small lenders might approve a loan to people with special circumstances who might be denied by a big bank.

Look for special programs

“Be sure to consider any government-backed loan programs that are relevant to your situation,” says Friddle.

Good Neighbor Next Door Program: Teachers, firefighters, police officers, and emergency medical technicians might qualify for a discount of 50% off the price of the home if they agree to live in a revitalization area.

Laura Agadoni is a landlord and a journalist whose articles appear in various publications such as The Houston Chronicle, The Motley Fool, San Francisco Gate, Zacks, The Huffington Post, The Penny Hoarder, and Arizona Central. Visit her website at www.lauraagadoni.com.

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